munipiece2.jpgFive weeks is a long time for a fundraiser — imagine if your “Fresh Air” listening was interrupted by begging for bucks for so long! — but the San Francisco Municipal Transportation Agency is not your typical needy entity. The MTA will start selling taxicab medallions on May 20, director Nathaniel P. Ford, Sr., told the Appeal on Wednesday night, and has until the July 1 end of the fiscal year to make a projected $11.2 million.

In other words, Muni has five weeks to sell about 44 taxi permits, otherwise next year’s budget deficit gets bigger.

Realistically, the MTA hopes to reap anywhere between $4 million and $5 million from the taxicab sales, Ford said Wednesday. That’s still four a week, at $250,000 per, so not bad of a haul per sale. The $11.2 million was included in the current fiscal year’s budget. Any difference will be “carried over” into next year’s budget, Ford said, when $36 million from the state will be available.

This projection just includes sales from the “50-60” taxi medallions the MTA currently has on hand, Ford said. Under the pilot sales plan approved by the MTA this spring, any driver over 70 who holds a medallion may sell it. The MTA would reap an additional $50,000 for each medallion an elderly driver sells.

The fixed $250,000 price, with guaranteed 7 percent financing from a consortium of lenders for a driver seeking a loan, is good only until December 31. At some time before then, the MTA board will revisit the taxi question and potentially change the terms of sale (To an auction? To a lottery? To an archery contest? Only time will tell).

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  • Greg Dewar

    for the MTA to bet on this, as well as some of their other “projected sources of income” is like me saying “oh I shall pay my rent with this unicorn that poops out pure gold and said unicorn will be here in the next 5 weeks.”

    Then the tears come when in fact, no such unicorn appears.

    Same thing here. Plus selling the medallions is a one time cash influx then that’s it. They should just lease them. Plus this is kind of an FU to all the people who played by the rules and waited for one (usual wait time is like 18 years or so).

  • Greg Dewar

    for the MTA to bet on this, as well as some of their other “projected sources of income” is like me saying “oh I shall pay my rent with this unicorn that poops out pure gold and said unicorn will be here in the next 5 weeks.”

    Then the tears come when in fact, no such unicorn appears.

    Same thing here. Plus selling the medallions is a one time cash influx then that’s it. They should just lease them. Plus this is kind of an FU to all the people who played by the rules and waited for one (usual wait time is like 18 years or so).

  • Matt Baume

    Wait hold on. If you want a license to drive a taxi, it costs a quarter million dollars? Am I understanding that correctly? That is insane, right?

  • Matt Baume

    Wait hold on. If you want a license to drive a taxi, it costs a quarter million dollars? Am I understanding that correctly? That is insane, right?

  • Chris Roberts

    Matt: not exactly, and not yet, anyway. Right now medallions don’t really cost anything (at least you can’t buy one). If you or I wanted to jump behind the wheel and drive a taxi tomorrow, we could — we’d just rent a medallion from one of the 1,500 or so people/cab corporations who own one. If we want medallions of our very own, we have to put our names on a list and wait a while to get one, probably 15 years or more. Can’t buy me cabs.

    Under this plan, they would cost $250,000 on the open market, but drivers could still go the list route, and for every medallion the MTA sells, they will give one to someone on the list. Drivers over 70, some of whom DID buy medallions when you still could before Proposition K in 1978, will also be able to sell their medallions for $250,000; they’d keep about $200,000 and the rest goes to MTA and a cab drivers’ retirement fund, the first of its kind in SF.

  • Chris Roberts

    Matt: not exactly, and not yet, anyway. Right now medallions don’t really cost anything (at least you can’t buy one). If you or I wanted to jump behind the wheel and drive a taxi tomorrow, we could — we’d just rent a medallion from one of the 1,500 or so people/cab corporations who own one. If we want medallions of our very own, we have to put our names on a list and wait a while to get one, probably 15 years or more. Can’t buy me cabs.

    Under this plan, they would cost $250,000 on the open market, but drivers could still go the list route, and for every medallion the MTA sells, they will give one to someone on the list. Drivers over 70, some of whom DID buy medallions when you still could before Proposition K in 1978, will also be able to sell their medallions for $250,000; they’d keep about $200,000 and the rest goes to MTA and a cab drivers’ retirement fund, the first of its kind in SF.

  • April2010

    The idea to make taxi medallions sale able is a right way to go, but as it is presented by SFMTA now it is upside down again in San Francisco. Look carefully for the rules of game.
    Per current pilot rules: You pay 250K, but what if you become sick in a few month later and cannot work (working requirements are still apply even if you pay 250K for medallion !!!!)., you would need to sell it, but for what price assuming it is still 250K (auctioned, fixed, who knows), you lose 20% SFMTA tax. Per same pilot rule if buyer does not have enough money for down payment you would need to deposit 15% for him. You cannot choose a qualify buyer, SFMTA does for you. If you died your family forced to sell medallion immediately, even at that moment may be not a good from economic stand point. Now assuming you over 70 year age and decide to sell your medallion. From 250K sale price you would get roughly 150K back in cash (20% of SFMTA tax, plus rest would count as your investment income or even worst as business, in best case scenario with current tax law you would be taxed at 15% long term capital gain for investment, but if they would count it as short term gain or as a business, you would pay your full income tax rate somewhere between 25-35%.. (Consult your tax adviser for all details)
    The right way to go: If SFMTA decided to sell medallions; they all should be auctioned to any A-card holders. Driving requirements should be lifted, it does not make any sense, you pay 250K to buy business and they tell you how you manage your time. Imagine you buy liquor store and someone would tell you how many hours you personally should be in store. Next with pilot program rules it is unclear how much more money SFMTA would need next year to close the budget deficit, and they may decide to issue and sell another 100 medallions in 5 weeks. That would diminish your investment at least 10%.

  • April2010

    The idea to make taxi medallions sale able is a right way to go, but as it is presented by SFMTA now it is upside down again in San Francisco. Look carefully for the rules of game.
    Per current pilot rules: You pay 250K, but what if you become sick in a few month later and cannot work (working requirements are still apply even if you pay 250K for medallion !!!!)., you would need to sell it, but for what price assuming it is still 250K (auctioned, fixed, who knows), you lose 20% SFMTA tax. Per same pilot rule if buyer does not have enough money for down payment you would need to deposit 15% for him. You cannot choose a qualify buyer, SFMTA does for you. If you died your family forced to sell medallion immediately, even at that moment may be not a good from economic stand point. Now assuming you over 70 year age and decide to sell your medallion. From 250K sale price you would get roughly 150K back in cash (20% of SFMTA tax, plus rest would count as your investment income or even worst as business, in best case scenario with current tax law you would be taxed at 15% long term capital gain for investment, but if they would count it as short term gain or as a business, you would pay your full income tax rate somewhere between 25-35%.. (Consult your tax adviser for all details)
    The right way to go: If SFMTA decided to sell medallions; they all should be auctioned to any A-card holders. Driving requirements should be lifted, it does not make any sense, you pay 250K to buy business and they tell you how you manage your time. Imagine you buy liquor store and someone would tell you how many hours you personally should be in store. Next with pilot program rules it is unclear how much more money SFMTA would need next year to close the budget deficit, and they may decide to issue and sell another 100 medallions in 5 weeks. That would diminish your investment at least 10%.